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Accreditor Fight With CFPB Moves to Federal Court

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The battle between a national accrediting organization overseeing many for-profit colleges and the Consumer Financial Protection Bureau is now making its way through federal court.

The Accrediting Council for Independent Colleges and Schools, known as ACICS, argued in a court filing late Tuesday that it shouldn’t have to turn over records to the CFPB because the agency lacks jurisdiction over college accreditors.

In August, the CFPB demanded records and testimony from the accrediting agency as part of an investigation into possible “unlawful acts and practices in connection with accrediting for-profit colleges.” The accreditor lost its bid to have the CFPB reconsider the demand for records.

After ACICS failed to turn over the documents, the consumer bureau last month asked a federal judge to order the accreditor to provide them.

Responding this week to the CFPB’s legal action, the accreditor argued that the consumer bureau lacks the authority to compel it to hand over records because accreditors are not subject to any of the consumer financial laws the bureau enforces.

ACICS also argued that the bureau’s demand for records was overly burdensome and threatened the integrity of its accreditation process.

The CFPB's demand for records “has already disrupted the accrediting process and had a chilling effect on the likely future participation of its evaluators,” the accrediting organization said. “Indeed, to date, some evaluators have expressed their intention to no longer participate in the accrediting review process.”

Some Republicans have accused the consumer bureau for overstepping its authority while CFPB Director Richard Cordray has defended its investigation, suggesting that accrediting organizations may fall within the agency’s purview in some instances.